Banque Nationale de Paris (BNP) has raised the stakes in the French bank takeover battle sharply, valuing its targets Societe Generale (SG) at €18.9 billion and Paribas at €20.7 billion.
BNP, which is capitalised at about €18 billion (£14.18 billion), is therefore offering 2.2 times its own value by offering a total of €39.6 billion to form a group capitalised at €56.7 billion.
Shortly after trading was resumed the price of stock in Paribas was showing a gain of 4.88 per cent to €114 and in SG of 4.33 per cent to €178.30, but BNP shares fell by 3.5 per cent to €78.
If BNP succeeds in its audacious attack, which has shaken the authorities and the financial establishment, the new entity would be the biggest bank in Europe and in the world by assets.
BNP president Mr Michel Pebereau said that the new offer valued SG at €18.9 billion and Paribas at €20.7 billion or 2 per cent more than the price offered by SG for Paribas.
Mr Pebereau said that he reserved the right to buy back stock to the extent of €4 billion if his takeover succeeded. SG has also indicated that it would buy back shares if it acquires Paribas.
BNP, in counter-attacking SG only a day after the banks had rejected pressure from France's central bank and finance ministry to compromise in the national interest, said that its new terms represented an improvement of 5 per cent in the value of SG and 12.4 per cent for Paribas.
In France 5 per cent is the minimum amount by which a bid may be increased. The new terms highlight the extent to which shareholders in Paribas have benefited from the battle.
But since the offers are in the form of stocks and cash, the precise value depends on the traded value of the shares.
SG launched a friendly takeover of Paribas on February 1st. BNP then made a hostile bid for both SG and Paribas.
The takeover battle was eagerly watched by foreign investors, who saw their shareholdings surge in value until 10 days ago when the authorities called the presidents of the three banks for compromise talks.
Finance Minister Ms Dominique Strauss-Kahn warned that the banks had to be "pushed" to a deal in the national interest and without the involvement of any foreign banks, even though foreign investors own nearly half of the three banks.
Foreign investors have been angered by the intervention of the authorities which had the effect of smothering expectations of a bidding war.
The total capitalisation of the three banks fell by €6.5 billion - 11 per cent - after the authorities had intervened.
